Incyte Corporation (INCY - Free Report) reported a loss of 13 cents per share in the third quarter of 2013, in line with the loss hinted by the Zacks Consensus Estimate but narrower than the year-ago loss of 17 cents per share. The year-over-year narrower loss was due to higher revenues.
Quarter in Detail
Total revenue in the reported quarter increased 40.7% to $85.1 million. Revenues were boosted by the increase in Jakafi sales and an inclusion of product royalty revenues. Jakafi, Incyte’s sole marketed product, was launched in the U.S. in Nov 2011, for treating patients suffering from intermediate or high-risk myelofibrosis (MF). Revenues were, however, short of the Zacks Consensus Estimate of $92 million.
Total revenue comprised net product revenues, product royalty revenues, contract revenues and others.
Incyte recorded net product revenue of approximately $60.2 million from Jakafi sales in the third quarter of 2013, up 37.8% year over year. Revenues from the drug were also up 11.3% sequentially.
Incyte has a collaborative agreement with Novartis (NVS - Free Report) to market Jakafi outside the U.S. The drug has also been approved by the European Commission to treat adults suffering from primary MF, post-polycythemia vera MF or post-essential thrombocythemia MF.
We note that Jakafi is being studied for additional indications as well. Incyte, in collaboration with Novartis, is currently evaluating Jakafi in two phase III clinical trials (RESPONSE and RELIEF), for the treatment of patients suffering from polycythemia vera (PV). The company intends to submit a supplemental new drug application for Jakafi in the PV indication in Jun 2014 based on the positive results from the RESPONSE trial. Results from the RELIEF trial are expected in mid-2014. Jakafi is expected to be approved in this new indication by the end of next year.
In August, the Incyte announced positive top-line results from the phase II RECAP trial (n=136) on Jakafi in combination with Roche’s (RHHBY - Free Report) Xeloda (capecitabine) for the treatment of refractory metastatic pancreatic cancer. Results revealed that overall survival in patients under the Jakafi arm was higher than that of the placebo arm. The drug is also being studied for the treatment of advanced solid tumors.
Incyte received product royalty revenues of $8.2 million from Novartis during the reported quarter. The company did not record any product royalty revenues in the year-earlier quarter. Contract revenues during the third quarter of 2013 remained flat at $16.7 million. Other revenues accounted for the balance.
Both research and development (R&D) expenses (up 43.2% to $71.7 million) and selling, general and administrative (SG&A) expenses (up 28.9% to $26.4 million) climbed during the quarter. Incyte’s efforts to develop its pipeline were primarily responsible for the rise in R&D expenses in the third quarter of 2013.
Apart from releasing third-quarter 2013 results, the company updated its guidance 2013. The company now expects net product sales for 2013 to be at the higher end of its previous guidance range of $220–$230 million. The net sales guidance excludes any product royalty revenues received from Novartis on sales of Jakavi (EU trade name for Jakafi).
We are encouraged by the strong Jakafi sales during the third quarter of 2013. Incyte also has a robust pipeline. Successful development and commercialization of these candidates should drive growth. We expect investor focus to remain on Jakafi’s performance in the coming quarters.
Incyte, a biopharma company, currently carries a Zacks Rank #3 (Hold). Biopharma stocks such as Actelion Ltd. currently look better positioned with a Zacks Rank #1 (Strong Buy).